As quasi-tax expense items such as various fees, charges, and levies borne in the course of operating small and midsize enterprises have become a burden on corporate activity, the Ministry of SMEs and Startups will conduct a fact-finding review and, for the first time, examine relief measures.
The aim is to review the expense structure that corporations must pay to the government and local governments in addition to taxes and improve unreasonable regulations.
The Ministry of SMEs and Startups is also pursuing measures to ease the burden of taxes, including launching work to improve special tax regimes for small and midsize enterprises shifting to new businesses.
According to the Ministry of SMEs and Startups on the 18th, the Small and Medium Business Ombudsman recently began work to review civil petitions from small and midsize enterprises concerning fees, charges, and levies.
Fees are charges collected in return for providing public services, such as tuition or registration fees, and charges refer to, for example, road or public waters occupancy fees. Corporations also pay farmland preservation and development levies.
The small and midsize business community has long complained about the burden of these quasi-tax expenses. Last year, former President Yoon Suk-yeol temporarily eased the development levy, under which the state recoups part of the development gains from land development projects, but the corporate burden was not resolved. The development levy, which amounts to about 25% of development gains, can reach hundreds of millions of won.
Even for large corporations and public enterprises, development levies have a significant impact on expense, to the extent that the Korea Electric Power Corporation and the Korea Land & Housing Corporation (LH) have engaged in lawsuits with local governments over the levies. From the perspective of smaller small and midsize enterprises, the perceived difficulty is even higher for expenses in the tens to hundreds of millions of won.
In cases such as public waters occupancy fees and warehouse/storage usage fees, corporations may pay tens of millions of won depending on the occupied area, period, and purpose. The government revised regulations in 2020, including a 40% reduction in state-owned land usage fees for microbusinesses and small and midsize enterprises, but the burden felt on the ground remains.
The ombudsman plans to objectively analyze the current system and identify and improve regulations that do not match reality. It also plans to examine the criticism that charges and levies are designed around the collecting agencies, without considering the total expense that corporations must投入 to comply with the regulations.
For the first time, the Ministry of SMEs and Startups will also review matters related to objection and relief procedures.
Occupancy fees paid for using public goods such as roads for a certain period, technology valuation fees paid to assess the economic value of owned technologies, and farmland preservation levies imposed when converting farmland to other uses have had unclear cost calculations or vague assessment criteria, making it difficult for corporations to raise objections.
A representative of a small and midsize enterprise said, "Because there is no separate objection procedure, if levies and the like are excessive, we file an administrative appeal and then proceed to litigation," adding, "It is not easy for small and midsize enterprises to follow legal procedures, so there needs to be a way to secure rights in advance."
An official at the Ministry of SMEs and Startups noted, "I understand that we are also reviewing plans to introduce a new management framework after studying overseas cases and conducting expert verification this time," and said, "The purpose is to create standards that make sense in the field and reduce the burden felt by corporations."
In addition, the Ministry of SMEs and Startups is reviewing various measures to ease the burden of taxes on small and midsize enterprises. Recently, it has also been preparing improvements to special tax regimes for small and midsize enterprises that switch their business lines to new businesses. Even when small and midsize enterprises want to change their business lines in step with industrial change, they hesitate because it costs a lot of expense.
In the past, the government had also prepared various special regimes, such as reducing income tax or corporate tax for small and midsize enterprises that changed business lines outside the greater Seoul area, but these have now disappeared. Another official said, "We plan to review the findings of the study on improvements to special tax regimes and discuss them with the Ministry of Economy and Finance."